Diabetic retinopathy (DR), a major complication of diabetes, is the leading cause of vision impairment and loss in the working age population. Similar to other micro- and macrovascular complications of diabetes, the development and progression of DR is well documented to correlate with the duration of diabetes. This phenomenon suggests that chronic cellular stress driven by a diabetic milieu may play a role in the pathogenesis of DR. We recently discovered that endoplasmic reticulum (ER) stress is activated in the retinas of several models of diabetes. In this application, we propose to delineate the role of ER stress in DR. We hypothesize that diabetes-induced ER stress promotes inflammation and is thereby a central driving force inducing retinal pathology leading to DR (e.g. breakdown of the blood-retinal barrier, capillary cell death, and aberrant new vessel growth in the retina). We plan to use complementary in vitro and in vivo experiments, pharmaceutical and genetic interventions, and state-of-art techniques to test our hypothesis. In Aim 1, we will fully characterize ER stress and the unfolded protein response (UPR), a protective mechanism of the ER, in the retinas of two different models of diabetes and address how diabetes causes retinal ER stress and alters the UPR. In Aim 2, we propose to study the therapeutic effects and mechanism of action of X-box binding protein 1 (XBP1), an endogenous ER stress inhibitor, in mitigating retinal inflammation and reducing the vascular pathology associated with DR. In Aim 3, using newly generated cell-specific XBP1 knockout mouse models, we will delineate the role of ER stress in specific retinal cell types and to establish the importance of endogenous XBP1 in counteracting ER stress and inflammation and protecting retinal vascular cells from diabetic damage. In summary, the proposed studies will establish the central role of ER stress and the importance of the UPR in the development of diabetes-driven inflammation and retinal vascular pathology. In addition, this work will establish the therapeutic potential of a novel protective agent to block the onset and/or progression of DR, a disease that is approaching epidemic proportions in the US. The outcomes may also impact other vision-threatening diseases in which ER stress is potentially implicated, such as age-related macular degeneration (AMD).